Stimulated?

Today is the one-year anniversary of the landmark stimulus bill which most economists agree has staved off a second Great Depression. The evidence that the stimulus has worked is overwhelming – the New York Times has an: in-depth article looking at its actual impact on jobs, and an: indispensable graphic showing a timeline of key economic indicators before and after its passage. There’s another: beautiful chart based on job loss data from Dec 2007 to Jan 2010 which also makes the impact of the stimulus crystal clear. The recognition of the stimulus’ success isn’t just data-driven – Republican lawmakers who have publicly denounced it for political gain have been quietly and hypocritically scrambling for stimulus money for their districts – as documented: by the Wall Street Journal and: by the Washington Times.

The only real flaw in the stimulus bill was that it wasn’t big enough – and in a wasted effort at seeking bipartisan Republican support, included some of the largest tax cuts in the nation’s history (but no Republicans voted for it anyway).

And yet, not only is public opinion largely hardened in the perception that the stimulus is a failure, but Obama himself has suffered a major drop in his approval ratings, even to the point that a majority of respondents in a recent CNN poll felt: he didn’t deserve a second term. That: anti-incumbent attitude is largely the result of a perception that there hasn’t been enough change, that the new Administration hasn’t made progress on fixing the economy (undeservedly so) or health care (deservedly so).

Why hasn’t Obama been able to make his case for his achievement in his first year?

I demurred, of course. : Being merely a mediocre economics major, of course, what did I know?

Now it’s June, and the oil in the Gulf of Mexico isn’t the only thing mucking up the Obama mythology:

The private economy–that is, the wealth creation part, not the wealth redistribution part–gained only 41,000 jobs, down sharply from the encouraging 218,000 in April, and 158,000 in March. The unemployment rate did fall to 9.7% from 9.9%, but that was mainly because the labor force contracted by 322,000. Millions of Americans, beyond the 15 million Americans officially counted as unemployed, have given up looking for work.

Worst of all, nearly half of all unemployed workers in America today (a record 46%) have been out of work for six months or more. Normally job growth accelerates during the early stages of an economic rebound, but this dismal report suggests that the recovery remains well short of becoming a typical expansion.

There were some slivers of good news in the May jobs report. For those who have jobs, the average work week rose by 0.1 hours to 34.2 hours and earnings nudged upward by 0.3%. Manufacturers added 29,000 workers, and their hours worked jumped 5.1%, the best since 1983.

Perhaps this is what White House chief economist Christina Romer was looking at yesterday when she cited “encouraging developments” in the jobs market and “continuing signs of labor market recovery.” : We doubt this was the private reaction in the Oval Office, whose occupant was told by Ms. Romer and economic co-religionist Jared Bernstein that the February 2009 stimulus would kick start a recovery in growth and jobs. . . .

Imagine if Ms. Romer had instead promised in 2009 that Congress could spend nearly $1 trillion, and 16 months later the unemployment rate would be nearly 10% and that more than 2.5 million additional Americans would be without jobs. Would Congress have still spent the cash? Well, sure, Congress will always spend what it can get away with, but the American public would have turned against the stimulus even faster than it has. . . .

Almost everything Congress has done in recent months has made private businesses less inclined to hire new workers. ObamaCare imposes new taxes and mandates on private employers. Even with record unemployment, Congress raised the minimum wage to $7.25, pricing more workers out of jobs. The teen unemployment rate rose to 26.4% in May, and for those between the ages of 25 and 34 it rose to 10.5%. These should be some of the first to be hired in an expansion because they are relatively cheap and have the potential for large productivity gains as they add skills.